LA SALLE UNIVERSITY

COLLEGE OF BUSINESS AND ACCOUNTANCY

1st Semester of Academic Year 2019-2020

Qualifying Examination
STRATEGIC COST MANAGEMENT
December 14, 2018 | 1:30 PM – 4:30 PM

Instructions:
Select the correct answer for each of the following questions. Mark only one answer for each item by shading the box
corresponding to the letter of your choice on the provided official answer sheet. Strictly no erasures allowed. Any erasures will
render your answer invalid. You have 3 hours to complete the exam.

1. The purchase requisition is a document used to: b. 2,800 d. 1,200

a. initiate the return of merchandise to the vendor
b. inform the purchasing agent of a need for a 8. A ratio that is employed in connection with the
materials item productivity and performance standard to measure
c. initiate payment for merchandise received the operating achievement of an operation is the:
d. inform the Purchasing Department of a receipt of a. productivity-efficiency ratio
goods b. physical output per labor-hour ratio
c. base-rate ratio
2. The expense that theoretically is not a correct part of d. fringe-cost ratio
inventory cost is
a. freight-in 9. Uno Manufacturing Corporation has found that the
b. freight-out production of a certain product is subject to an 80%
c. inspection costs learning curve. Production is in lots of 100 units, with
d. accounting costs for materials received 8 hours required for the first lot each time the product
is manufactured. The total time to produce 400 units
3. Theoretically, cash discounts permitted on purchased is:
raw materials should be: a. 19.52 hours c. 32 hours
a. added to other income, whether taken or not b. 24 hours d. 20.48 hours
b. added to other income, only if taken
c. deducted from inventory, whether taken or not 10. The department responsible for recruiting and
d. deducted from inventory, only if taken employment procedures, training programs, job
descriptions, and job evaluations is the:
4. The bill of materials: a. Payroll Department
a. is the list of materials requirements for each step b. Personnel Department
in the production sequence c. Cost Department
b. informs the purchasing agent of the quantity and d. Production Planning Department
kind of materials needed
c. contracts for quantities to be delivered 11. In highly automated manufacturing where direct labor
d. certifies quantities received and reports results of is small relative to other production costs and not
inspection and testing easily traceable to specific jobs, direct labor costs may
be charged directly to:
5. A cost of having too few items on hand in inventory is: a. Income Summary
a. frequent stockouts b. Factory Overhead Control
b. excessive insurance costs c. Work in Process
c. spoilage costs d. Cost of Goods Sold
d. costs of obsolescence
12. If an employee earns ₱10 per hour and receives time-
6. Annual demand for squash racquets is 50,000 units, and-a-half for hours worked in excess of 40 per week,
and carrying costs amount to ₱2 per unit. Order costs in a week when 45 hours were worked the overtime
for the company amount to ₱5. The optimum order premium would be:
quantity in units for squash racquets is (rounded to a. ₱25 c. ₱10
the nearest unit): b. ₱50 d. ₱5
a. 191 c. 250
b. 500 d. 100 13. Symbols that can be processed electronically to
identify numbers, letters, or special characters are:
7. The following information is available for Odyssey a. clock cards
Company's Material Y: b. optical scanners
Annual usage in units 10,000 c. time tickets
Working days per year 250 d. bar codes
Normal lead time in working days 30
Maximum lead time in working days 70 14. To check the accuracy of hours worked, one would
Assuming that the units of Material Y will be required ordinarily compare clock cards with:
evenly throughout the year, the order point would be: a. employee earnings records
a. 2,000 c. 2,105 b. personnel records
Page 1 of 5
 c. job tickets 22. For which of the following businesses would a process
d. labor variance reports cost system be appropriate?
a. Auto repair service
15. All of the following phrases are used as alternate b. Paint manufacturer
terminology for "factory overhead" except: c. Specialty printer
a. manufacturing expense d. Custom furniture manufacturer
b. indirect manufacturing cost
c. other expense 23. Department B had 3,000 units in Work in Process that
d. factory burden were 40% completed at the beginning of the period at
a cost of ₱12,500. 14,000 units of direct materials
16. Estimated factory overhead is ₱600,000, and the hours were added during the period at a cost of ₱28,700.
usage of machinery is expected to be 150,000. Factory 15,000 units were completed during the period, and
overhead is applied at the rate of ₱10 per direct labor 2,000 units were 75% completed at the end of the
hour. The wage rate for direct labor is ₱6 per hour, period. All materials are added at the beginning of the
and the total number of estimated direct labor hours process. Direct labor was ₱32,450 and factory
for the period is: overhead was ₱18,710.
a. 100,000 c. 300,000
b. 150,000 d. 60,000 The number of equivalent units of production for the
period for materials if the first-in, first-out method is
17. Underapplied factory overhead related to a significant used to cost inventories was:
decrease in production should be charged to: a. 15,000 c. 16,000
a. Finished Goods Inventory b. 17,800 d. 14,000
b. Cost of Goods Sold
c. Work in Process Inventory and Finished Goods 24. Department G had 3,600 units, one-third completed at
Inventory the beginning of the period, 12,000 units were
d. Work in Process Inventory, Finished Goods completed during the period, 2,000 units were one-
Inventory, and Cost of Goods Sold fifth completed at the end of the period, and the
following manufacturing costs were debited to the
18. Brownfield Company applies factory overhead on the departmental work in process account during the
basis of direct labor hours. Budget and actual data for period:
direct labor and overhead for the year are as follows: Work in process, beginning of period ₱30,000
Budget Actual Costs added during period:
Direct labor hours 600,000 550,000 Direct materials (10,400 at ₱8) 83,200
Factory overhead costs ₱720,000 ₱640,000 Direct labor 62,000
Factory overhead 24,800
The factory overhead for Brownfield for the year is:
a. underapplied by ₱40,000 Assuming that all direct materials are placed in
b. overapplied by ₱20,000 process at the beginning of production and that the
c. overapplied by ₱40,000 first-in, first-out method of inventory costing is used,
d. underapplied by ₱20,000 what is the material and conversion cost per unit,
respectively.
19. Avery Co. uses a predetermined factory overhead rate a. ₱5.94 and ₱5.86 c. ₱8.00 and ₱8.68
based on direct labor hours. For the month of October, b. ₱5.94 and ₱6.38 d. ₱8.00 and ₱7.75
Avery's budgeted overhead was ₱300,000 based on a
budgeted volume of 100,000 direct labor hours. Actual 25. Which of the following is not a use of the cost of
overhead amounted to ₱325,000 with actual direct production report?
labor hours totaling 110,000. How much was the a. To help managers control operations.
overapplied or underapplied overhead? b. To help managers isolate problems.
a. ₱5,000 overapplied c. To project production.
b. ₱5,000 underapplied d. To help managers to improve operations.
c. ₱30,000 overapplied
d. ₱30,000 underapplied 26. Department E had 4,000 units in Work in Process that
were 40% completed at the beginning of the period at
20. All of the following are names for the product costing a cost of ₱12,500. Of the ₱12,500, ₱8,000 was for
method in which both fixed and variable costs are material and ₱4,500 was for conversion costs. 14,000
included in overhead rates, except: units of direct materials were added during the period
a. absorption costing at a cost of ₱28,700. 15,000 units were completed
b. conventional costing during the period, and 3,000 units were 75%
c. direct costing completed at the end of the period. All materials are
d. full costing added at the beginning of the process. Direct labor was
₱32,450 and factory overhead was ₱18,710.
21. The condition that results either from greater
productive capacity than the company could ever hope If the average cost method is used the material cost
to use or from an imbalance in equipment or per unit would be:
machinery is termed: a. ₱2.04 c. ₱1.91
a. theoretical capacity b. ₱1.59 d. ₱2.00
b. practical capacity
c. idle capacity 27. Department E had 4,000 units in Work in Process that
d. excess capacity were 40% completed at the beginning of the period at
a cost of ₱12,500. Of the ₱12,500, ₱8,000 was for
material and ₱4,500 was for conversion costs. 14,000
Page 2 of 5
 units of direct materials were added during the period d. a separate net realizable value upon which to
at a cost of ₱28,700. 15,000 units were completed allocate some of the joint costs
during the period, and 3,000 units were 75%
completed at the end of the period. All materials are 34. The Hovart Corporation manufactures two products
added at the beginning of the process. Direct labor was out of a joint process—Compod and Ultrasene. The
₱32,450 and factory overhead was ₱18,710. If the joint (common) costs incurred are ₱250,000 for a
average cost method is used the conversion cost per standard production run that generates 120,000
unit would be: gallons of Compod and 80,000 gallons of Ultrasene.
a. ₱3.71 c. ₱2.97 Compod sells for ₱2.00 per gallon, while Ultrasene
b. ₱2.84 d. ₱3.23 sells for ₱3.25 per gallon. If there are no additional
processing costs incurred after the split-off point, the
28. A form prepared periodically for each processing amount of joint cost of each production run allocated
department summarizing (1) the units for which the to Compod by the quantitative unit method is:
department is accountable and the units to be a. ₱100,000 c. ₱130,000
assigned costs and (2) the costs charged to the b. ₱120,000 d. ₱150,000
department and the allocation of these costs is termed
a: 35. Ace Company produced 20,000 units of Clubs, 15,000
a. factory overhead production report units of Diamonds, and 10,000 units of Hearts. If the
b. manufacturing cost report company uses the average unit cost method of
c. process cost report allocating joint production costs, which were
d. cost of production report ₱120,000 for the period, the joint costs allocated to
Diamonds would be:
29. Relative sales value at split-off is used to allocate: a. ₱40,000 c. ₱80,000
a. Cost Beyond Split-Off b. ₱20,000 d. ₱45,000
b. Joint Costs
c. Both a and b 36. Which of the following statements is (are) true?
d. Neither a nor b a. Standard costs serve as a device for measuring
efficiency.
30. Idaho Corporation manufactures liquid chemicals A b. Standard costs should always be revised when
and B from a joint process. Joint costs are allocated on they differ from actual costs.
the basis of relative market value at split-off. It costs c. both a and b
₱4,560 to process 500 gallons of Product A and 1,000 d. neither a nor b
gallons of Product B to the split-off point. The market
value at split-off is ₱10 per gallon for Product A and 37. Which of the following statements is (are) true?
₱14 for Product B. Product B requires an additional a. If the standard to produce a given amount of
process beyond split-off at a cost of ₱2 per gallon product is 2,000 units of direct materials at ₱12
before it can be sold. What is Idaho's cost to produce and the actual was 1,600 units at ₱13, the direct
1,000 gallons of Product B? materials quantity variance was ₱5,200 favorable.
a. ₱5,040 c. ₱4,860 b. If the standard to produce a given amount of
b. ₱4,360 d. ₱5,360 product is 1,000 units of direct materials at ₱11
and the actual was 800 units at ₱12, the direct
31. The characteristic that is most often used to materials price variance was ₱800 unfavorable.
distinguish a product as either a joint product or a by- c. both a and b
product is the: d. neither a nor b
a. amount of labor used in processing the product
b. amount of separable product costs that are 38. The following data relate to direct labor costs for the
incurred in processing current period:
c. amount (i.e., weight, inches, etc.) of the product Standard costs 7,500 hours at ₱11.60
produced in the manufacturing process Actual costs 6,000 hours at ₱12.00
d. relative sales value of the products produced in What is the direct labor time variance?
the process a. ₱3,000 favorable c. ₱2,400
favorable
32. Jeffrey Co. manufactures Products A and B from a joint b. ₱15,000 unfavorable d. ₱17,400 favorable
process. Market value at split-off was ₱700,000 for
10,000 units of A, and ₱300,000 for 15,000 units of B. 39. Which of the following is not a reason for a direct
Using the market value at split-off approach, joint materials quantity variance?
costs properly allocated to A were ₱140,000. Total a. Malfunctioning equipment
joint costs were: b. Purchasing of inferior raw materials
a. ₱98,000 c. ₱233,333 c. Material requiring rework
b. ₱200,000 d. ₱350,000 d. Spoilage of materials
33. A company produces three main joint products and Use the following to answer the next three questions:
one by-product. The by-product's relative market Standard Actual
value is quite low compared to that of the main Variable OH Rate ₱3.35
products. The preferable accounting for the by-
Fixed OH Rate ₱1.80
product's net realizable value is as:
Hours 18,900 17,955
a. an addition to the revenues of the other products
allocated on their respective net realizable values Fixed Overhead ₱46,000
b. revenue in the period in which it is sold Factory Overhead ₱101,450
c. a reduction in the joint cost to be allocated to the
three main products 40. Calculate the total factory overhead cost variance

Page 3 of 5
 a. ₱4,866.75 Unfavorable b. Designing systems to provide information for
b. ₱8,981.75 Favorable internal and external reports.
c. ₱4,866.75 Favorable c. Gathering data from sources other than the
d. ₱8,981.75 Unfavorable accounting system.
d. Deciding the best level of inventory to be
41. Calculate the fixed factory overhead volume variance maintained.
a. ₱1,701 Favorable
b. ₱4,866.75 Unfavorable 50. Which is NOT a common accounting classification of
c. ₱1,701 Unfavorable costs?
d. ₱4,866.75 Favorable a. By the method of payment for the expenditure.
b. By the objective of expenditure.
42. Calculate the variable factory overhead controllable c. By behavior.
variance d. By the function incurring the expenditure.
a. ₱8,981.75 Favorable
b. ₱7,280.75 Unfavorable 51. Which classification of costs is most relevant for
c. ₱8,981.75 Unfavorable income statements to be used internally?
d. ₱7,280.75 Favorable a. Behavior.
b. Method of payment.
43. Cost accounting is directed toward the needs of c. Function.
a. regulatory agencies c. internal users d. Object.
b. external users d. stockholders
52. The set of processes that transform raw materials into
44. Cost accounting is necessitated by finished products is known as a
a. the high degree of conversion found in certain a. differentiation strategy
businesses. b. flexible manufacturing system
b. regulatory requirements for manufacturing c. lowest cost strategy
companies. d. value chain
c. management’s need to be aware of all production
activities. 53. In a production process with a machine constraint, if a
d. management’s need for information to be used for quality control point is to be established, it should be
planning and controlling activities. set up
a. within the machine's processes
45. Which of the following is (are) true? b. directly after the machine has performed its
a. Accounting is an information system that provides functions
essential data about the economic activities of an c. immediately before the machine
entity to various users to aid them in making d. All of the above
informed judgments and decisions.
b. Managerial accounting reports are prepared 54. From a cost management view, research and
according to generally accepted accounting development cost represents
principles. a. a life-cycle investment
c. Both a and b b. a period expense
d. Neither a nor b c. an unearned revenue
d. a risk reserve
46. The controller of a company or other
a. a staff manager 55. Value engineering seeks to obtain increased
b. an operating manager a. product life-cycle and reduced direct labor inputs
c. an accountant, not a manager b. planning team membership and reduced time-to-
d. a natural manager market
c. product performance ratio and reduced substitute
47. Managerial accounting is similar to financial goods
accounting in that d. product functionality and reduced costs
a. both are governed by generally accepted
accounting principles. 56. The theory of constraints can
b. both deal with economic events. a. identify what limitations exist with raw material
c. both concentrate on historical costs. suppliers
d. both classify reported information in the same b. follows a methodology similar to linear
way. programming
c. be ignored since it assumes too many estimates in
48. One of the ways managerial accounting differs from the production cycle
financial accounting is that managerial accounting d. show where bottlenecks exist and sets the limit of
a. is bound by generally accepted accounting output to these bottlenecks
principles.
b. classifies information in different ways. 57. Kaizen means
c. does not use financial statements. a. doing it the Japanese way
d. deals only with economic events b. continuous improvement
c. employee empowerment
49. Which activity is NOT normally performed by d. implementation of a centralized organizational
managerial accountants? structure
a. Assisting managers to interpret data in
managerial accounting reports. 58. Which of the following competitive strategies is least
profitable?

Page 4 of 5
 a. differentiation c. confrontation Estimated inventory (units), May 1 10,000
b. cost leadership d. price fixing Desired inventory (units), May 31 15,000
Expected sales volume (units):
59. A cost leadership strategy emphasizes South region 30,000
a. product features West region 40,000
b. low prices North region 20,000
c. just-in-time production capabilities
Unit sales price ₱10
d. short-run opportunities for cost minimization
a. 85,000 c. 95,000
b. 90,000 d. 105,000
60. One characteristic of the conventional
a. flexible manufacturing systems
67. Wright Corporation began its operations on
b. manufacturing cells
September 1 of the current year. Budgeted sales for
c. a just-in-case philosophy
the first three months of business are ₱240,000,
d. a high degree of quality control
₱300,000, and ₱420,000, respectively, for September,
October, and November. The company expects to sell
61. Planning and control are
20% of its merchandise for cash. Of sales on account,
a. different names for the same thing.
70% are expected to be collected in the month of the
b. the basic functions of management.
sale, 25% in the month following the sale, and the
c. described equally well by the terms "decision
remainder in the following month.
making" and "performance evaluation."
The cash collections in October from accounts
d. exemplified by, respectively, financial statements
receivable are:
and budgeting.
a. ₱216,000 c. ₱210,000
b. ₱240,000 d. ₱288,000
62. A firm that is competing using a _______________________
strategy is attempting to create a perception of
68. Kidder Company began its operations on March 31 of
uniqueness that will permit a higher selling price.
the current year. Projected manufacturing costs for
a. value chain c. lowest cost
the first three months of business are ₱156,800,
b. lead time d. differentiation
₱195,200, and ₱217,600, respectively, for April, May,
and June. Depreciation, insurance, and property taxes
63. A just-in-time manufacturer is more likely than a
represent ₱28,800 of the estimated monthly
conventional manufacturer to
manufacturing costs. Insurance was paid on March 31,
a. receive more frequent deliveries of materials.
and property taxes will be paid in November. Three-
b. spend less money on advertising.
fourths of the remainder of the manufacturing costs
c. need workers with fewer skills.
are expected to be paid in the month in which they are
d. all of the above.
incurred, with the balance to be paid in the following
month.
64. Budgeting supports the planning process by
The cash payments for manufacturing in the month of
encouraging all of the following activities except:
May are:
a. requiring all organizational units to establish their
a. ₱156,800 c. ₱166,400
goals for the upcoming period
b. ₱195,200 d. ₱146,400
b. increasing the motivation of managers and
employees by providing agreed-upon expectations
69. As of January 1 of the current year, the Joyner
c. directing and coordinating operations during the
Company had accounts receivables of ₱50,000. The
period
sales for January, February, and March of 2007 were
d. improving overall decision making by considering
as follows: ₱120,000, ₱140,000 and ₱150,000. 20% of
all viewpoints, options, and cost reduction
each months sales are for cash. Of the remaining 80%
possibilities
(the credit sales), 60% are collected in the month of
sale, with remaining 40% collected in the following
65. For January, sales revenue is ₱600,000; sales
month. What is the accounts receivable balance as of
commissions are 5% of sales; the sales manager's
March 31?
salary is ₱96,000; advertising expenses are ₱80,000;
a. ₱72,000 c. ₱58,720
shipping expenses total 2% of sales; and
b. ₱48,000 d. ₱₱60,000
miscellaneous selling expenses are ₱2,100 plus 1/2 of
1% of sales. Total selling expenses for the month of
70. Management accountants usually provide for a
January are:
minimum cash balance in their cash budgets for which
a. ₱157,100 c. ₱183,750
of the following reasons:
b. ₱223,100 d. ₱182,100
a. stockholders demand a minimum cash balance
b. stockholders demand a minimum cash balance to
66. Based on the following production and sales estimates
have funds available for major capital
for May, determine the number of units expected to be
expenditures
manufactured in May.
c. it provides a safety buffer for variations in
estimates
d. to have funds available for major capital
expenditures

Page 5 of 5